When I started investing in equities, I used to be in awe of equity research reports. Immaculately formatted 5-page documents with their glossy charts and tables of financial projections followed by a confident Buy / Sell / Hold recommendation based on a precise target price. I figured those target prices were arrived at by hardcore sector experts working with proprietary excel models of such complexity they would probably crash any computer with conventional specifications. That awe lasted until I realized the “models” in use might as well have been random number generators due to their sensitivity to assumptions about an unknowable

Earlier this month, Yes Bank shares climbed 1% on news that they would consider a stock split in their next board meeting. On July 21st, Reliance Industries Limited announced a 1:1 bonus issue in it’s 40th AGM. If you’ve been investing in stocks for any length of time, you’ve probably come across such announcements from time to time. Both of these result in existing shareholders of the company getting additional shares. So, what is the difference between stock splits and bonus issues? First, let’s look at what’s NOT different between the two: Number of Shares Outstanding: Both stock splits and